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Nio Analyst Projects Upside On Stronger Orders, Improving Margins, Cash Flow

NIO) is likely to be sustained, according to a BofA Securities analyst who projects incremental upside over the next 12 months.

Ming Hsun Lee reiterated a Buy rating on Nio ADSs and upped the price target from $5.50 to $7.30.” data-reactid=”20″>The Nio Analyst: Ming Hsun Lee reiterated a Buy rating on Nio ADSs and upped the price target from $5.50 to $7.30.

stronger orders, anticipated vehicle gross profit improvement in the second quarter, improving free cash flow and a favorable EV purchase subsidy scheme, analyst Hsun Lee said in a Friday note.” data-reactid=”21″>The Nio Thesis: BofA’s bullish stance on Nio is premised on stronger orders, anticipated vehicle gross profit improvement in the second quarter, improving free cash flow and a favorable EV purchase subsidy scheme, analyst Hsun Lee said in a Friday note.

The analyst attributed the strength in orders to Nio’s improving product quality, fast channel expansion and new capacity addition. From today’s 3,500-unit monthly run rate, he sees capacity increasing 5,000 units by the end of 2020, alleviating investor concerns over capacity expansion.

Hsun Lee is also optimistic of new order wins growing sequentially once the company starts delivering in the third quarter and launches a 100kWh battery pack in the fourth quarter.

The higher sales and cost cuts are likely to augment vehicle gross profit expansion, the analyst said. 

investment from Hefei government and the improvement anticipated in cash flow, Nio’s cash on hand will support the company until 2022-23, he said. ” data-reactid=”25″>Based on the cash raised in Nio’s recent equity offering and investment from Hefei government and the improvement anticipated in cash flow, Nio’s cash on hand will support the company until 2022-23, he said. 

Accounting for the solid sales momentum and new capacity expansion, BofA raised its 2021-22 volume sales estimate by 8% and 6%, respectively.

The stock was up 2.71% at $6.07 at the time of publication Friday. 

Latest Ratings for NIO

Date Firm Action From To
Jun 2020 Goldman Sachs Upgrades Neutral Buy
May 2020 JP Morgan Upgrades Underweight Neutral
Mar 2020 JP Morgan Assumes Underweight

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